Farmers fretting future

Positive today; but negative tomorrow

April 1, 2012

Although commodity prices are still trending to record, or near-record highs, U.S. farmers said they are not positive that farming will be as profitable a year from now.

This was a summary statement made by DTN Monday morning, following the release of its Agriculture Confidence Index.

This is the third year for the index, which attempts to chart farmers' confidence in the profitability of their markets.

According to Katie Micik, markets editor for DTN, although farmers are feeling good about current high prices with grain still to sell, "it's hard for them to see how things will get better, after the best year most have ever seen."

The survey revealed farmers assess their present situation at a strongly positive value of 140.2, while expectations for the next 12 months notch a pessimistic low at 87.4.

A value of 100 is considered neutral with higher values indicating optimism and lower values indicating pessimism.

Micik said farmers point to increased input costs for this year's crops, along with expectations of commodity prices falling as the primary reason for the negative long-term view.

She said there is also concern that ag land prices will also be whittled as part of the negative expectations through the 2012-2013 marketing year.

According to the U.S. Department of Agriculture, U.S. farmers reset income records in 2011 at $98 billion, with strong prices supported by ramped up exports.

However, with a weaker grain market viewed ahead, especially after USDA's release next week of the planting intensions report, the federal agency is predicting income to trim back to $91.7 billion, a $6.3 billion drop.

DTN's survey found that 88.3 percent of responding farmers think commodity grain prices will be lower or the same in 12 months.

At the same time, they expect input costs to keep rising, specifically fuel costs and more weed management due to many weed varieties surviving the mild winter.

Micik said with the vast majority expecting grain prices to drop or level off, "they think a profit squeeze may be coming."

When asked about USDA's planting intensions report, Micik said the expectation is that farmers will plant 94 to 95 million acres in corn, the second highest amount since records were being kept.

However, as farmers look as the threat of continuous corn causing problems with depleted soil and incubating the virus that causes Goss' wilt; as well as the likelihood that soybean export demand will remain high, she thinks there may be a jump to more soybean planting that most people are expecting.